Mexican peso depreciates against dollar amid OECD’s lowered growth forecasts and U.S. economic data; investors eye Trump-Xi meeting.
On Tuesday, June 3, 2025, the Mexican peso depreciated slightly against the U.S. dollar as the greenback recovered after a brief period of weakness. The local currency closed trading at 19.2348 pesos per dollar, slipping 3.50 cents, or 0.18 percent, from Monday’s close of 19.1998 per dollar, according to official data released by the Bank of Mexico (Banxico).
The dollar’s intraday range extended from a low of 19.2031 to a high of 19.2847 pesos, reflecting modest volatility as traders parsed fresh economic projections and awaited key policy signals. Meanwhile, the Intercontinental Exchange’s U.S. Dollar Index (DXY) climbed 0.58 percent to settle at 99.25 points, marking a rebound from six-week lows.
Analysts attributed the peso’s slide partly to renewed strength in the dollar, which regained ground after concerns about the economic impact of U.S. trade policies briefly drove the greenback down against other major peers. As investors absorbed a more pessimistic global growth outlook, risk-off sentiment crept into emerging market currencies.
OECD Lowers Global Growth Forecasts
The Organization for Economic Cooperation and Development (OECD) updated its global economic forecasts on Tuesday, projecting slower growth for 2025 and 2026 than previously expected. In its latest report, the OECD trimmed the world growth estimate to 2.9 percent for both years, down from the 3.1 percent forecast issued in March for 2025 and a 3.0 percent projection for 2026.
The downgrade reflects the widening impact of what the OECD describes as “geopolitical tensions” and the “cumulative effects of U.S. trade policies.” Higher tariffs have begun to weigh on export-oriented industries globally, dampening manufacturing output and prompting a cautious stance among business leaders.
For the Mexican economy, which remains closely tied to both U.S. trade flows and global demand, the downward revision signals potential headwinds ahead. Lower external demand could slow export revenue, weaken remittance inflows, and pressure domestic growth. As global forecasts darken, the peso faces increased vulnerability to risk sentiment and shifts in international capital flows.
Investors Watch Trump-Xi Dialogue
Adding to market uncertainty, investors now focus on a likely telephone call between U.S. President Donald Trump and Chinese President Xi Jinping expected later this week. Trump accused Beijing of failing to uphold previous tariff-reduction commitments, raising the specter of renewed tariff escalations on a range of goods.
A breakdown in U.S.-China tariff talks could trigger fresh volatility in global markets and bolster demand for safe-haven assets, including the U.S. dollar. Conversely, any signs of de-escalation may relieve pressure on emerging market currencies.
In Mexico, where roughly 80 percent of exports go to the U.S. market, any setback in U.S.-China trade relations poses indirect risks. Higher U.S. import costs could amplify inflationary pressures south of the border, potentially forcing Banxico to consider monetary policy adjustments to defend the peso.
U.S. Labor Market Data
On the domestic side of the U.S. economy, a labor market report released Tuesday signaled a rebound in job openings for April, though it also showed layoffs ticking higher. According to data from the U.S. Bureau of Labor Statistics, job vacancies climbed modestly after several months of declines. However, the uptick in layoffs indicates that some firms are scaling back as uncertainty grows.
These figures arrive ahead of the nonfarm payrolls report scheduled for Friday, June 6, 2025. Analysts expect Friday’s data to show continued job gains, but any surprise in payroll figures could sway Federal Reserve policy expectations. A stronger-than-anticipated labor market might embolden Fed officials to maintain or further tighten interest rates, which would likely support the dollar. Conversely, signs of weakness could dampen rate-hike bets and ease dollar demand.
Dollar Index and Regional FX Performance
The DXY, which tracks the dollar against six major currencies, rose 0.58 percent to 99.25 on Tuesday. The index’s upward move reflects renewed confidence in U.S. monetary policy stability and the dollar’s safe-haven status.
In Latin America, other currencies echoed the peso’s downward trajectory. The Brazilian real slipped 0.25 percent, closing at 4.85 per dollar, while the Colombian peso fell 0.30 percent to 4,034 per dollar. Traders cited similar global growth concerns and a stronger DXY as the common drivers.
Back home, Banxico’s next policy meeting is scheduled for June 12, 2025. Economists widely expect the central bank to leave its benchmark interest rate unchanged at 11.50 percent, given inflation remains near the upper bound of its target range. Any unexpected policy shift could trigger fresh volatility in the peso.
Outlook: Weighing Risks and Opportunities
Looking ahead, the peso’s trajectory will hinge on a mix of international and domestic factors. Should the Trump-Xi call yield a truce and U.S. growth hold up, the dollar may soften, offering relief for the peso. However, if tariffs intensify or global growth falters more than anticipated, the peso could face sustained selling pressure.
On the home front, emerging signs of moderating inflation and stable consumption might allow Banxico to adopt a neutral stance. If Mexico’s gross domestic product for Q2 2025 beats estimates, investors could take a more bullish view on the peso.
Still, the broader backdrop remains cautiously negative. The OECD’s lowered forecasts imply that Mexico cannot count on robust external demand to power its recovery. Meanwhile, any shift in U.S. monetary policy or another escalation in trade tensions could quickly reverse market sentiment.
For now, traders will stay glued to updates from Washington and Beijing, new U.S. employment data, and Banxico’s policy signals. Until more clarity emerges, the outlook for the peso remains clouded by global headwinds and geopolitical uncertainty.
